Meeting of the International Oil Pollution Compensation Fund 

On 28-30 June 2010, the Danish Maritime Authority took part in a meeting held by the International Oil Pollution Compensation (IOPC) Fund, where ongoing compensation claims and other relevant issues were discussed. A considerable part of the meeting was about what the IOPC Fund is to do when receiving many claims for compensation of very small amounts.

This issue has become especially relevant after the HEBEI SPIRIT accident. On 7 December 2007, the tanker HEBEI SPIRIT was hit by a crane while at anchor off Korea. About 11,000 tonnes of crude oil was released into the sea and polluted several provinces along the Korean west coast.

So far, the IOPC Fund has received claims for compensation of cleaning-up expenses and for losses in the tourist and fishing industries of about GBP 1 billion. The Secretariat of the Fund deals with the claims on an ongoing basis and has started paying compensations.

Until now, about 13,000 claims for compensation have been received. However, it is expected that this figure will increase drastically and perhaps amount to about 125,000 claims. If so, this will be the greatest number of compensation claims in connection with one single accident ever. This will make heavy demands on the IOPC Fund not least since the claims are very small ones made by local fishermen and others who have difficulties documenting their loss.

Because of the many claims, it was decided at the meeting that the compensation will continue to be paid at a rate of 35 per cent of the loss since it is not assessed that there are sufficient means for paying the full amounts.

In the light of the experiences gained with HEBEI SPIRIT, Korea has decided to accede to the Supplementary Fund. Hereby, Korea will in the future be part of the scheme, which will provide considerable improved coverage in case of major pollution accidents and behind whose establishment Denmark was one of the driving forces. The Supplementary Fund is to ensure that the necessary means are available for covering the expenses in case of very large pollution damages and covers up to about DKK 7 billion.

In October 2009, it was decided to establish a working group to examine whether it is possible to find solutions to how to deal with so many claims. The working group met for the first time in June 2010. The discussions of the working group were based on the condition not to compromise the fundamental principle only to pay compensation if a relevant loss is documented. A number of areas were identified within which work will be continued at the next meetings. They are especially the following:

Lack of evidence: It will be examined whether, in well-defined cases, some flexibility can be applied to very small claims.

Faster payment of compensation: It is to be examined whether it is possible to develop models for assessing claims and whether it is possible to develop a practice as regards pre-payment from the P&I Clubs (i.e. the insurance) and the IOPC Fund.

Reduction of costs for assessing claims: Experience shows that about 15-30 per cent of the Fund’s means are spent on case-administration, etc. It is to be examined whether the IOPC Fund should be furnished with some flexibility to pay compensation for small amounts in cases where it is clear that a loss has been suffered as a consequence of oil pollution, but where the expenses for determining the exact amount exceeds the claim.

The role of the member States: It is to be examined whether the member States can contribute to the process assessing the claims in cases with a very large number of claims lacking the necessary documentation of a loss.

The next meeting of the IOPC Fund is scheduled for October 2010. The working group will have its next meeting in the spring of 2011.

The IOPC Fund is an international compensation scheme the purpose of which is to pay compensation to those who have suffered an economic loss as a consequence of spill of oil from tankers.

More information on the IOPC Fund is available from its webpage, where the meeting documents are also found.